CPI inflation for October came in a touch weaker than consensus. In annual terms, disinflation therefore continued, with headline inflation falling back to 3.2% y/y.

As expected, the fall in gasoline prices (driven partly by lower refining margins) was the main driver of the flat m/m inflation reading. However, core inflation was also unexpectedly benign.

All in all, this is a very positive report for the Fed, with now five consecutive months of relatively benign inflation readings. This further strengthens our conviction that the Fed is done raising rates, and it raises the risk that the Fed could yet pivot to rate cuts earlier than our newly-revised June call.